3 Southeast Asian Sourcing Options That Are Good Alternatives to China

Most importers do not know how to minimize the problems that might arise from geopolitical events, natural disasters, or other unprecedented circumstances like the ongoing pandemic. With the disease outbreak completely disrupting the supply chain network in China, many have realized the severe consequences of depending excessively on just one supplier. An investor generally diversifies his holdings to avoid depending on a single stock’s performance. Now, importers have also realized the importance of a widespread supply chain network and how it can help counter risk. In the last few years, a lot of importers have shifted some or most of their production to Southeast Asia. They have started focusing on sourcing from Asia and may also be trying to avoid the increasing wages in China.

Today, businesses are eyeing different Southeast Asia countries, but only three stand out as the key places for the best sourcing results. However, switching from a Chinese supplier to one from these areas does not signify that you do not have to depend on Chinese production anymore. The reality is that several Southeast Asian factories rely on Chinese suppliers for materials and help. Also, the COVID-induced pandemic has disrupted productions there as well. Despite these, know that the area is a hub of excellent manufacturing options and suppliers that are worth considering. Read on to know about the best countries there.

●    Vietnam

The region’s manufacturing segment may not be as diverse as that of China’s but is still fairly diverse considering its size. Importers primarily focus on machines and electronics in Vietnam as there is a presence of big multinational brands like Panasonic and Samsung. Also, there are many OEM factories in this category.

Small and medium-sized firms will also get numerous capable manufacturers producing furniture, footwear, and textiles. However, know that since the beginning of the trade war between the U.S and China, plenty of these factories have witnessed an increased demand and are at capacity. Although the place’s transport infrastructure does not rank as highly as Malaysia’s or Thailand’s, it is still fairly developed.

The region has minimum monthly wages between $132-$190. It is much lower than China and other places, though its workers are somewhat less skilled. For labor-intensive items, Vietnam can be a decent option.

●    Thailand

It is one of the largest exporters in Southeast Asia. Also, like the above region, Thailand’s largest export is electronics and machines. So, acquire the help of professional sourcing services and reap off the benefits from these areas. Thailand manufactures an array of automotive parts and also has a vast local supply of rubber. They are also experts in producing gold and jewelry. The nation’s climate ideally suits the growth of rubber trees, making it the top rubber producer in the world. It immensely benefits importers who need rubber as a component for their products.

Thailand has been significantly investing towards improving its infrastructure via its Eastern Economic Corridor plan. Like Vietnam, the nation has a long coastline and great logistics performance, ensuring the timeliness of shipments. The nation’s wages have risen immensely in the last few years, making them a bit less competitive on price. However, their workers are slightly more talented and trained than Vietnam’s. The Asian nation’s growing infrastructure development and the presence of rubber certainly make it attractive to businesses.

●    Malaysia

In Malaysia, electronic equipment and machines make up the majority of the exports. It includes office machine parts, broadcasting tools, and integrated circuits. The Southeast Asian nation also develops a wide range of measuring equipment like orthopedic appliances and oscilloscopes. Also, just like Thailand, it is amongst the top rubber producers in the world.

The country is home to several extremely skilled and trained workers. However, it comes at a price as they charge higher wages than the other large exporters. Malaysia is also renowned for its ease of doing business. Over the years, the region has made numerous reforms to make it easier to avail permits and trade across borders, thus facilitating sourcing from Asia.

The nation has a well-developed transportation infrastructure, especially its sea liner services. It hosts two of the biggest seaports in Asia. Malaysia is the best place for importers who wish to do business in an upper-middle-income nation and also demand highly-trained workers.

These three countries can develop products in different categories, but each has its advantages and limitations. Hire expert sourcing services, and depending on your specific requirements, do business with one of these viable alternatives to China.